Even law firms get sued for discrimination once in a while, but you would expect lawyers to be smart enough not to serve Big Red and fried chicken to black employees in celebration of Juneteenth.  Talk about stereotyping!!

Sadly that is just what has happened to Dallas law firm Eberstein & Witherite (Better known as the 1-800-Carwreck firm).  The firm’s “all white” management allegedly made the decision to celebrate Juneteenth with Big Red and Fried Chicken after two employees asked to have the day off.

According to the petition, the firm’s HR manager replied to the request by saying:  “Y’all don’t need no day off. Ya’ll need to work.”  She then allegedly sought and obtained permission to serve Big Red and fried chicken to employees on that day instead.

For those who are not familiar, Juneteenth, or, Freedom Day, is an unofficial holiday on June 19 each year to commemorate the announcement of the abolition of slavery in Texas.  On June 18, 1865, during the civil war, Federal General Gordon Granger landed on Galveston Island.  The following day June 19th, General Granger proclaimed the slaves of Texas freed.  Over time, a celebration developed around the day each year.

The law firm’s racist traits do not appear to end with the Juneteenth incident, however.  The lawsuit alleges that the firm’s HR manager made other comments such as:

  • Complaining that she is “sick and tired of Black women bitching about being the victim” (interesting for a personal injury firm).
  • Quizzing black employees by saying “I don’t even know if you’re Black.”
  • Commenting “Oh no. You’re not going to have that mad, bitter Black attitude with me.”

Later, the firm is alleged to have terminated both black employees for being unhappy with their jobs.

Handling these types of cases for as many years as I have, you would think nothing surprises me anymore.  This one did.  Take a lesson from the claims made here:  Don’t try to be cute.  And, (no opinions cast here) be sure that your HR Manager is not a racist.

Fifty years ago yesterday John F. Kennedy signed the Equal Pay Act into law.  Even with that much time to eradicate unfair pay between men and women, many still believe a gap exists.  Stories from the Huffington Post, the Washington Post, and NPR, all cite a 2010 Census Bureau Report that women earn just 77 cents for every dollar earned by men.  More specifically, the median salary earned by men was 23% higher than that earned by women.

According to a January 2009 Report prepared for the US Department of Labor, however, the difference is just 20.4% between the sexes and several factors account for most of that gap.  These include:

  • A greater percentage of women than men tend to work part-time.  Part-time work tends to pay less than full-time work.
  • A greater percentage of women than men tend to leave the labor force for child birth, child care and elder care.  Some of the wage gap is explained by the percentage of women who were not in the labor force during previous years, the age of women, and the number of children in the home.
  • Women, especially working mothers, tend to value “family friendly” workplace policies more than men.  Some of the wage gap is explained by industry and occupation, particularly,the percentage of women who work in the industry and occupation.

The research also suggests that differences not incorporated into the 2009 Report may account for part of the remaining gap.  The 2009 Report focuses on wages rather than total compensation. Other research indicates that women may value non-wage benefits more than men do, and as a result prefer to take a greater portion of their compensation in the form of health insurance and other fringe benefits.

Regardless of your point of view, several in Congress do not believe the Equal Pay Act has done enough.  They have been advocating for the passage of a Paycheck Fairness Act since 2005 when Hillary Clinton first offered the legislation for consideration.  Senator Kristen Gillibrand, D-NY appeared yesterday on CBS News to advocate for the 2013 version of the proposed law.

The proposed Paycheck Fairness Act modifies the existing language of the Equal Pay Act to curtail one of the exemptions for disparate pay between men and women.  Rather than having a reason “other than sex” which will be acceptable to a court, the new act proposes that employers must have a “bona fide reason other than sex such as education, training, or experience.”  This new language is perceived to be more stringent.

Additionally, the Paycheck Fairness Act proposes more significant penalties for employers who violate the law and training for women in how to negotiate wages better.  According to Senator Gillibrand in her CBS interview, just 7% of women will attempt to negotiate a higher salary when offered a new position as opposed to 55% of men.

It will be interesting to see if the 2013 version of the law is passed.  Each edition proposed since 2005 has died on the vine.

On May 2, 2013, Governor Perry signed the Texas Uniform Trade Secrets Act into law.  So, let’s cut right to it.  What does it do different for employers?  The most notable feature is that the law allows the “prevailing party” to recover fees in certain circumstances.

This is a nice feature.  Trade secret litigation is expensive and it is often difficult to prove that the employer has really suffered loss due to their theft.  Employers can spend an arm and a leg trying to stop the employee who stole the secrets only to fall short when it comes to showing how much money they lost.  Damages from stolen trade secrets can sometimes be difficult to prove.  Perhaps (we won’t know until cases start interpreting the new law) the threat of paying the employer’s fees will become at least some kind of stick against the former employee under those circumstances.

Employers need to be careful though.  Because fees can be awarded to the “prevailing party” there is a chance that the employee can recover fees if the theft of trade secret claim is made in “bad faith.”

The act takes effect on September 1, 2013, and applies to misappropriations after that date.

As Business Week reports this week, the US Court of Appeals for the District of Columbia struck down the poster requirement created by the National Labor Relations Board.  For those who do not know or do not remember, in August 2011, the NLRB adopted a rule requiring private businesses to post a notice of the rights employees have to unionize.

The poster was initially required to be posted as of November 14, 2011, but the NLRB postponed the start date several times.  When suit was filed, the NLRB decided to wait until the resolution of the litigation to set a new deadline.

It’s a good thing the NLRB waited.  The rule is now invalid in the area covered by the DC Circuit  Court of Appeals and has been found invalid by a US District Court in South Carolina with an appeal pending before the 4th Circuit Court of Appeals.

It may be boring legal reasoning which some are not interested in, but the DC Circuit overruled the NLRB requirement for two reasons.  The first we can all understand: free speech.  The Court found that employers have the right not to be forced to speak about employee rights to unionize.  Second, the Court found that the NLRB overstretched its authority because the penalties it imposed were beyond NLRB power.

What does this mean for Texas employers?  We reside under the jurisdiction of the 5th Circuit Court of Appeals – not the DC Circuit or the 4th Circuit.  There is not presently an appeal pending in the 5th Circuit, but, with the delay imposed by the NLRB to wait for the other cases to be resolved, employers here are safe for the moment.


New form I-9The U.S. Citizenship and Immigration Services (“USCIS”) have released a new form I-9.  This is the first change in almost 25 years according to the Society for Human Resource Management.  The new form incorporates new fields and has been reformatted.  USCIS hopes this will reduce errors in completion.

Employers may begin using the new form as of March 8, 2013, but have a 60 day window until May 7, 2013, to continue using the old form.  The form is also available in Spanish, but the Spanish form is for use in Puerto Rico only.  Businesses in the 50 states may use the new Spanish form for reference but must complete the English language form for all employees.

Employers are not required to complete new I-9 forms on existing employees and should only use the new form for employees starting after March 8, 2013.

The new form is easily recognizable because it is 2 pages as opposed to the former 1 page form.  It adds areas for an employee’s foreign passport information (if applicable), email address, and telephone number.

As noted in my recent handbook editions on Recordkeeping, employers must keep the I-9 forms for their employees as long as they are employed and the latter of 3 years after the employee’s start date or 1 year after the employee leaves the company.

On February 5, 2013, the Department of Labor announced the final rules for changes to the Family and Medical Leave Act (FMLA) permitted under the National Defense Authorization Act of 2010.  From the time the act was passed until now, there has not been any final guidance for employers on the DOL’s position with respect to the changes to the law.  Now, final rules which become effective March 8, 2013, are available to assist employers to properly handle service member leave.

Highlights to the changes are:

1. Putting more meat on the bone regarding coverage for “covered veterans” which previously were not protected under the act.

2. Providing guidance on what is considered a serious injury or illness for a covered veteran.  Serious injury will include:

  • A continuation of a serious injury or illness that was incurred or aggravated when the covered veteran was a member of the Armed Forces and rendered the service member unable to perform the duties of the service member’s office, grade, rank, or rating;
  • A physical or mental condition for which the covered veteran has received a VA Service Related Disability Rating (VASRD) of 50 percent or greater and such VASRD rating is based, in whole or in part, on the condition precipitating the need for caregiver leave;
  •  A physical or mental condition that substantially impairs the veteran’s ability to secure or follow a substantially gainful occupation by reason of a disability or disabilities related to military service or would do so absent treatment; or
  • An injury, including a psychological injury, on the basis of which the covered veteran has been enrolled in the Department of Veterans Affairs Program of Comprehensive Assistance for Family Caregivers.

3. Permitting eligible employees to obtain certification of a service member’s serious injury or illness (both current service members and veterans) from any health care provider as defined in the FMLA regulations, not only those affiliated with the DOD, VA, or TRICARE networks.

4. Extending “qualifying exigency” leave to eligible employees who are family members of members of the Regular Armed Forces (previously limited to National Guard and Reserves) and adding the requirement for all military members to be deployed to a foreign country (not previously required) in order for service member leave to apply under the FMLA.

5. Increasing the amount of time an employee may take for qualifying exigency leave related to the military member’s Rest and Recuperation (R&R) leave from five days to up to 15 days.

6. Creating an additional qualifying exigency leave category for parental care leave to provide care necessitated by the covered active duty of the military member for the military member’s parent who is incapable of self-care.

And, finally, outside the service member revisions, the new rules create a unique method of calculation of leave for airline flight crew employees.

What does this mean for employers?  You need to update your policies and your thinking.  If your FMLA policy in your handbook is specific enough to list the details of service member leave, it now will be out of date.

Please enjoy this guest post from Travis Crabtree, my colleague in Houston whose practice focuses on internet law.  Visit Travis’ blog at www.emedialaw.com

Democratic Texas State Representative Helen Giddings filed a bill prohibiting employers in Texas from asking for social media passwords from applicants and current employees. Texas joins a long list of states that have either passed or proposed similar legislation.

On December 21, 2012, HB 318 was pre-filed. Democratic State Senator Chuy Hinojosa filed the exact bill with the Senate as SB 118. The bills read:

(b) An employer commits an unlawful employment practice if the employer requires or requests that an employee or applicant for employment disclose a user name, password, or other means for accessing a personal account of the employee or applicant, including a personal e-mail account or a social networking website account or profile, through an electronic communication device.

(c) This section does not prohibit an employer from:

(1) maintaining lawful workplace policies governing:

(A) employee usage of employer-provided electronic communication devices, including employee access to personal accounts on those devices; or

(B) employee usage of personal electronic communication devices during working hours;

(2) monitoring employee usage of employer-provided electronic communication devices or employer-provided e-mail accounts; or

(3) obtaining information about an employee or applicant for employment that is in the public domain or that is otherwise lawfully obtained.

Six states already have similar laws and many others are considering similar legislation. The National Conference of State Legislatures has a good resource that tracks what all of the states are doing in this area.

Here are a couple of issues I see with the Texas version.

1. There is no exemption for employers to investigate wrongdoing.

For example, Michigan lays out some exceptions that exclude “Disciplining or discharging an employee for transferring the employer’s proprietary or confidential information or financial data to an employee’s personal internet account without the employer’s authorization”; and “conducting an investigation or requiring an employee to cooperate in an investigation . . .”

2. There is no exemption for highly-regulated industries like securities.

The Michigan law exempts employers “if there is specific information about activity on the employee’s personal internet account, for the purpose of ensuring compliance with applicable laws, regulatory requirements, or prohibitions against work-related employee misconduct.”

3. What about shoulder-surfing?

The statute forbids employers from using “other means for accessing a personal account” but there is a qualifier at the end that seems to limit the employer’s access to the account ”through an electronic communication device.” So, can an employer tell an applicant or employee to log-in to Facebook while I look over your shoulder? It is certainly not clear. Other states take a more direct approach. The California law expressly forbids requiring an employee to “access personal social media in the presence of the employer” which would prevent shoulder surfing.

4. Immunity for employers who can no longer access social media accounts.

I normally advise companies not to use social media to screen applicants unless you have and follow a specific plan. I could foresee, however, that a mishap could happen at work and a creative plaintiff’s lawyer could argue negligent hiring because a social media search would have revealed the employee was racist, sexist, violent, etc. It would make sense then that if employers are prohibited from doing thorough social media research, they should not be held liable for failing to do so if something went wrong. Michigan has addressed this in its version by stating:

Sec. 7. (1) This act does not create a duty for an employer or educational institution to search or monitor the activity of a personal internet account.

(2) An employer or educational institution is not liable under this act for failure to request or require that an employee, a student, an applicant for employment, or a prospective student grant access to, allow observation of, or disclose information that allows access to or observation of the employee’s, student’s, applicant for employment’s, or prospective student’s personal internet account.

5. What about students?

Many of the bills apply the same rules to secondary school, colleges and universities. If we care about privacy, shouldn’t we apply it to them as well. These are just a few issues and I still question whether this a fix in search of a problem. Yes, there have been one or two publicized incidents of employers demanding access to social media accounts. But, I’m not the only one that questions whether laws forbidding requests for social media accounts are necessary. As the economy recovers, I would think this is something the market will handle. Besides, I see certain positions where such requests would be encouraged such as youth camp counselors or mental health providers, security personnel and employees for religious institutions.

This is the second part of our Texas Leg Watch 2013. The Texas Legislature meets every odd year, so we will monitor any bills of interest to the online media, marketing and start-up community. Our first post looked at a proposal that would allow civil lawsuits to be brought against internet online advertisements that resulted in human trafficking perhaps usurping the federal Communications Decency Act protections.

Melissa Nelson is “devastated” according to ABC News.  She was fired from her job as a dental assistant after 10 years of service because her male employer found her attractive and felt termination necessary to protect his marriage.

Nelson was hired in 1999 at the age of 21 to be a dental assistant in the office of James Knight, DDS in Webster County, Iowa.  Over the next 10 years, she worked side by side with Dr. Knight and thought of him as a father figure.  During the last six months of Nelson’s employ, she and Dr. Knight began texting one another about mostly benign personal matters.  Dr. Knight’s wife discovered the texting and demanded her husband terminate Ms. Nelson.  After talking with their priest, Ms. Nelson was called in and terminated with the priest present as a witness.

Shortly after termination, Nelson made a sex discrimination claim on the basis that Dr. Knight would not have terminated her if she were a male.  The Iowa Supreme Court, did not agree with Ms. Nelson and commentators everywhere seem to have an opinion.  When the issue was discussed on Good Morning America, the female hosts both commented how wrong it was for an employer to fire a woman for being attractive.  Ms. Nelson, when interviewed, stated that it signals that men can do whatever they want in the workplace.

It is a sad situation and I am sorry Ms. Nelson lost her job, but I agree with the court – not just on the law, but on the facts as well.  I can’t speak for Iowa, but in Texas where employment is at-will, the employer can terminate an employee at any time and the employee can quit at any time.  Both parties are generally permitted to terminate the relationship for no reason at all.  If Dr. Knight felt his marriage was at risk, who should say that he could not fire the employee?

Would Ms. Nelson say that she should not be able to quit if her husband wanted her to because Dr. Knight was young, rich, and handsome?  And, what about the female business owner that terminates the attractive male employee to protect her marriage?

In this case, the evidence showed that Dr. Knight never harassed or propositioned Ms. Nelson.  He met his obligation to be respectful of her.  The fact that she was a female was not the deciding point.  Should Dr. Knight be forced to continue to work in an intolerable environment – which he is supposed to have total control over – just because it might be unfair to Ms. Nelson?

No, he should not.

Put this in the “boring, but important” category.  Last month the 6th Circuit Court of Appeals found that Supplemental Unemployment Benefits (or “SUB”) payments are not considered wages and thus not taxable to the employee or the employer for FICA.

First, a little education.  What are SUB payments?  When an employer makes a reduction in force they sometimes set up a plan to make severance payments to employees to help them transition after losing their job and reduce the unemployment claims against the employer.

More specifically, Congress has provided that a SUB payment is: (1) an amount paid to an employee; (2) pursuant to an employer’s plan; (3) because of an employee’s involuntary separation from employment, whether temporary or permanent; (4) resulting directly from a reduction in force, the discontinuance of a plant or operation, or other similar conditions; and (5) included in the employee’s gross income.

Under the Quality Stores decision by the 6th Circuit, an employer can now offer a SUB plan for 7.65% less than before by escaping the FICA taxes.  Unfortunately, however, there is still some risk associated with using a SUB plan.  In another case by a different Federal circuit court, the payments were long ago held as taxable despite the very clear language in the tax code to the contrary.

If you are planning a reduction in force in the near future and would like to help minimize your unemployment claims, a SUB plan may be of benefit to you.  And, with the new case, hopefully a bit cheaper as well.

Remember that cruise ship that sank off the coast of Italy last year?  Remember the bumbling captain that ran the ship aground, cost the lives of 32 people, and abandoned the ship before his passengers?  His name is Francesco Schettino and the cruise line he worked for let him go immediately after the incident.  He is is facing charges of the European equivalent of manslaughter, but he is now suing for WRONGFUL TERMINATION!

Seriously?  Seriously.  Schettino’s lawyer, Bruno Leporatti reports to Reuters News:  “It is the right of every worker to appeal against his dismissal and Capt. Schettino has done no more than exercise that right.”

Well maybe, but that seems to be the way things are in Europe.  I really wasn’t planning to address this as a topic until I spoke with a former US, now French, attorney this week and asked about the differences.

I always thought it was less costly to run a business in Europe where they don’t have protections like the ADA, ADEA, and Title VII.  You simply don’t have to worry about those types of claims as much. Apparently I was wrong.  Instead of having many separate laws protecting employees, all of the claims are couched in terms of “wrongful termination” that allow this type of claim and was informed that virtually all European citizens make a claim for wrongful termination.  According to the attorney I spoke with, almost every European employer simply negotiates a severance agreement with their employees to avoid what they know will be the cost of even a poorly executed suit like Schettino is bringing against the cruise line.

Thankfully, Texas does not recognize a claim for wrongful termination.  At-will employment prevails allowing both employees and employers to terminate the relationship at any time.  Employers still have to worry about discrimination claims, but there are very few other claims an employee can make.   With many business owners lamenting the effects of Obamacare, it is nice to know there may still be a few reasons things are better over here.